The Ascendancy of a Criminal Financial Elite
The Two Faces of a Police State: Sheltering Tax Evaders, Financial Swindlers and Money Launderers while Policing the Citizens
By Prof. James Petras
Global Research, August 5, 2012
URL of this article: www.globalresearch.ca/index.php?context=va&aid=32220
“The rotten heart of finance” The Economist“There is a degree of cynicism and greed which is really quite shocking” Lord Turner Bank of England , Financial Service Authority
Introduction
Never in the history of the United States have we
witnessed crimes committed on the scale and scope of the present day by
both private and state elites.
An economist of impeccable credentials, James Henry,
former chief economist at the prestigious consulting firm McKinsey &
Company, has researched and documented tax evasion. He found that the
super-wealthy and their families have as much as $32 trillion (USD) of
hidden assets in offshore tax havens, representing up to $280 billion in
lost income tax revenue! This study excluded such non-financial assets
as real estate, precious metals, jewels, yachts, race horses, luxury
vehicles and so on. Of the $32 trillion in hidden assets, $23 trillion
is held by the super-rich of North America and Europe .
A recent report by a United Nations Special Committee
on Money Laundering found that US and European banks laundered over
$300 billion a year, including $30 billion just from the Mexican drug
cartels.
New reports on the multi-billion dollar financial
swindles involving the major banks in the US and Europe are published
each week. England ’s leading banks, including Barclay’s and a host of
others, have been identified as having rigged the LIBOR, or inter-bank
lending rate, for years in order to maximize profits. The Bank of New
York, JP Morgan, HSBC, Wachovia and Citibank are among scores of banks,
which have been charged with laundering drug money and other illicit
funds according to investigations from the US Senate Banking Committees.
Multi-national corporations receive federal bailout funds and tax
exemptions and then, in violation of publicized agreements with the
government, relocate plants and jobs in Asia and Mexico .
Major investment houses, like Goldman Sachs, have
conned investors for years to invest in ‘garbage’ equities while the
brokers pumped and dumped the worthless stocks. Jon Corzine, CEO of MF
Global (as well as a former CEO of Goldman Sachs, former US Senator and
Governor of New Jersey) claimed that he “cannot account” for $1.6
billion in lost client investors funds from the collapse of MF Global in
2011.
Despite the growth of an enormous police state
apparatus, the proliferation of investigatory agencies, Congressional
hearings and over 400,000 employees at the Department of Homeland
Security, not a single banker has gone to jail. In the most egregious
cases, a bank like Barclay’s will pay a minor fine for having
facilitated tax evasion and engaging in speculative swindles. At the
same time, the principle ‘miscreant’ in the LIBOR swindle, Chief
Operating Officer (COO) of Barclay’s Bank, Jerry Del Missier, will
receive a severance payout of $13 million dollars.
In contrast to the ‘lax’ law enforcement practiced by
the burgeoning police state with regard to the swindles of the banking,
corporate and billionaire elites, it has intensified political
repression of citizens and immigrants who have not committed any crime
against public safety and order.
Millions of immigrants have been seized from their
homes and work-places, jailed, beaten and deported. Hundreds of Hispanic
and Afro-American neighborhoods have been the target of police raids,
shootouts and killings. In such neighborhoods, the local and federal
police operate with impunity – as was illustrated by shocking videos of
the police shootings and brutality against unarmed civilians in Anaheim ,
California . Muslims, South Asians, Arabs, Iranians and others are
racially profiled, arbitrarily arrested and prosecuted for participating
in charities and humanitarian foundations or simply for attending
religious institutions. Over 40 million Americans engaged in lawful
political activity are currently under surveillance, spied upon and
frequently harassed.
The Two Faces of the US Government: Impunity and Repression
Overwhelming documentation supports the notion that
the US police and judicial system has totally broken down when it comes
to enforcing the law of the land regarding crimes among the financial,
banking, corporate elite.
Trillion-dollar tax-evaders, billionaire financial
swindlers and multi-billionaire money launderers are almost never sent
to jail. While some may pay a fine, none have their illicit earnings
seized even though many are repeat criminals. Recidivism among financial
criminals is rife because the penalties are so light, the profit are so
high and the investigations are infrequent, superficial and
inconsequential. The United Nations Office on Drugs and Crime (UNODC)
reported that $1.6 trillion was laundered, mostly in Western banks, in
2009, one fifth coming directly from the drug trade. The bulk of income
from the cocaine trade was generated in North America ($35 billion),
two-thirds of which were laundered in North American banks. The failure
to prosecute bankers engaged in a critical link of the drug trade is not
due to ‘lack of information’, nor is it due to the ‘laxness’ on the
part of regulators and law enforcement. The reason is that the banks are
too big to prosecute and the bankers are too rich to jail. Effective
law-enforcement would lead to the prosecution of all the leading banks
and bankers, which would sharply reduce profits. Jailing the top bankers
would close the ‘revolving door’, the golden portal through which
government regulators secure their own wealth and fortune by joining
private investment houses after leaving ‘public’ service. The assets of
the ten biggest banks in the US form a sizeable share of the US economy.
The boards of directors of the biggest banks inter-lock with all major
corporate sectors. The top and middle financial officials and their
counterparts in the corporate sector, as well as their principle
stockholders and bondholders, are among the country’s biggest tax
evaders.
While the Security and Exchange Commission, the
Treasury Department and the Senate Banking Committee all make a public
pretense of investigating high financial crimes, their real function is
to protect these institutions from any efforts to transform their
structure, operations and role in the US economy. The fines, which were
recently levied, are high by previous standards but still only amount
to, at most, a couple of weeks’ profits.
The lack of ‘judicial will’, the breakdown of the
entire regulatory system and the flaunting of financial power is
manifested in the ‘golden parachutes’ routinely awarded to criminal CEOs
following their exposure and ‘resignation’. This is due to the enormous
political power the financial elite exercise over the state, judiciary
and the economy.
Political Power and the Demise of ‘Law and Order’
With regard to financial crimes, the doctrine guiding
state policy is ‘too rich for jail, too big to fail’ , which translates
into multi-trillion dollar treasury bailouts of bankrupt kleptocratic
financial institutions and a high level of state tolerance for
billionaire tax-evaders, swindlers and money launderers. Because of the
total breakdown of law enforcement toward financial crimes, there are
high levels of repeat offenders in what one British financial official
describes as ‘cynical (and cyclical) greed’.
The current ‘banner’ under which the financial elite
have seized total control over the state, the budget and the economy has
been ‘change’. This refers to the deregulation of the financial system,
the massive expansion of tax loopholes, the free flight of profits to
overseas tax havens and the dramatic shift of ‘law enforcement’ from
prosecuting the banks laundering the illicit earnings of drug and
criminal cartels to pursuing so-called ‘terrorist states’. The ‘state of
law’ has become a lawless state. Financial ‘changes’ have permitted and
even promoted repeated swindles, which have defrauded millions and
impoverished hundreds of millions. There are 20 million mortgage holders
who have lost their homes or have been unable to maintain payments;
tens of millions of middle class and working class taxpayers who were
forced to pay higher taxes and lose vital social services because of
upper class and corporate tax evasion. The laundering of billions of
dollars in drug cartel and criminal wealth by the biggest banks has led
to the deterioration of neighborhoods and rising crime, which has
destabilized middle and working class family life.
Conclusion
The ascendancy of a criminal financial elite and its
complicit, accommodating state has led to the breakdown of law and
order, the degradation and discrediting of the entire regulatory network
and judicial system. This has led to a national system of ‘unequal
injustice’ where critical citizens are prosecuted for exercising their
constitutional rights while criminal elites operate with impunity. The
harshest enforcement of police state fiats are applied against hundreds
of thousands of immigrants, Muslims and human rights activists, while
financial swindlers are courted at Presidential campaign fund raisers.
It is not surprising today that many workers and
middle class citizens consider themselves to be ‘conservative’ and
‘against change’. Indeed, the majority wants to ‘conserve’ Social
Security, pubic education, pensions, job stability, and federal medical
plans, such as MEDICARE and MEDICAID against ‘radical’ elite advocates
of ‘change’ who want to privatize Social Security and education, end
MEDICARE, and slash MEDICAID. Workers and the middle class demand
stability of jobs and neighborhoods and stable prices against run-away
inflation of medical care and education. Wage and salaried citizens
support law and order, especially when it means the prosecution of
billionaire tax evaders, criminal money-launderering bankers and
swindlers, who, at most, pay a minor fine, issue an excuse or ‘apology’
and then proceed to repeat their swindles.
The radical ‘changes’ promoted by the elite, have
devastated life for millions of Americans in every region, occupation
and age group. They have destabilized family life by undermining job
security while undermining neighborhoods by laundering drug profits.
Above all they have totally perverted the entire system of justice where
the ‘criminals are made respectable and the respectable treated as
criminals’.
The first defense of the majority is to resist ‘elite
change’ and to conserve the remnants of the welfare state. The goal of
‘conservative’ resistance will be to transform the entire corrupt legal
system of ‘functional criminality’ into a system of ‘equality before the
law’. That will require a fundamental shift in political power, at the
local and regional level, from the bankers’ boardrooms to neighborhood
and workplace councils, from compliant elite-appointed judges and
regulators to real representatives elected by the majority groaning
under our current system of injustice.